<!-- Swiftype Variables -->

CHART CENTRAL

Effect of pass-through provisions

Publicly traded alternative asset managers paid on average 8.2% in income taxes in the third quarter, up slightly from the year before, but still below what they were paying three and five years ago. By comparison, the average tax rate for U.S. financial companies has hovered around 30% over the same period. Much of the gap can be attributed to the pass-through status of most of these alternative managers. Investors, including many institutional investors, are considered limited partners, and any income generated by these investments is taxed at the individual level, not the corporate level.

Average assets under management for these firms has been steadily climbing along with operating margins despite ongoing pressure on the industry to reduce fees. For investors with means, these investments, which include private equity, private real estate and debt vehicles, should provide outlets for yield amid growing concern over public markets' prospects in the near- to midterm.

*Alternative asset managers used for observation: Apollo Global Management, Ares Management, Blackstone Group, Carlyle Group, Fortress Investment Group, KKR & Co. and Oaktree Capital Management (OAK). Members of the S&P financials sector index were used for financials sector data.